Pushing back pension to 75

[Kiro]

Interesting article I came upon today, and i have not seen this being mentioned a lot in the news.
Pushing back pension to 75 (or even 70+ maybe) may increase health insurance and taxes by a substantial % amount.
A lot of calculation will need to be done regarding when is the ‘best’ age to start receiving it.

https://gendai.ismedia.jp/articles/-/94816?page=1&imp=0

[RetireJapan]

Very interesting.

Of course at the end of the day it is not really about optimising things so that you get the most money possible, but rather to make sure you have enough to live a happy life on. For some people this may mean delaying their pension to ensure a higher 'income floor' even if that means they will pay more tax over their lifetime.

[TBS]

Yes, this topic was also discussed here. The end of that thread has calculations for some different pension drawdown scenarios, including accounting for the taxation & health insurance effects the article discusses.

I agree with RetireJapan that there is more to this issue than simply shooting for "the best" financial outcome. The appropriate option will be individual circumstances dependent. However, I think it is important to raise awareness of downsides of deferring the pension, like this one, to stop a mistaken notion being formed that deferring the state pension = universally good.

[Bubblegun]

I have no reason why but this popped into my head but I had to pop it down here. As we are often talking about pushing back pensions ages, either as an individual or as a nation.

Pushing back the retirement age might not be really that good for the bigger companies.

Because I was wondering, if they made people retire at an older age, the companies wouldn't be able to reduce their salaries.
So by keeping the retirement low, forcing the worker to retire early, to get their pension, then rehire them on a part time basis, ( cough cough) at a lower salary is in some perverse way a hidden tax cut for the company and a great way for the company to save money.

NO? Am I missing something.

[emikami]

Bubblegun,

I totally agree. Japan definitely has a serious issue with the super aging population, wages not going up, and pension declining using "macro-slide formula". What is Macro-slide formula anyway? Some type of excuse to lower the pension in order to keep it from bankrupting the whole system because they couldn't raise the kosei nenkin tax rates the working population because the workers are also pushed well beyond the limit. So how are hard working people ending up with pension that pays less than welfare? As Putin stated, Japan is the most successful socialist state.

Fiscal responsibility is one thing but I don't know how you can improve the economy by raising tax and cutting benefits. The general ignorance of the voters is another issue. If a politician decides to expand limits to iDeCo and NISA and cut tax on other investment activities, voters complain they are favoring the rich. If they tax cash balance on corporation to try to encourage business to pay higher wages, corporations complain they already paid tax before they were able to keep high cash reserves.

Look at the exit tax system in place and a system to disclose foreign financial assets. Look at the low inheritance tax exemption. These are relatively recent changes to try to tax the "rich". The issue is that it also discourages successful foreigners to moving to Japan and also Japanese Citizen whom have left Japan to get paid more to never return to Japan. So the intention to collect more tax is already backfiring ending up reducing the total tax revenue, limiting job opportunities for the working population, and cutting pension benefits for the retired.

[TokyoBoglehead]

I have no reason why but this popped into my head but I had to pop it down here. As we are often talking about pushing back pensions ages, either as an individual or as a nation.

Pushing back the retirement age might not be really that good for the bigger companies.

Because I was wondering, if they made people retire at an older age, the companies wouldn't be able to reduce their salaries.
So by keeping the retirement low, forcing the worker to retire early, to get their pension, then rehire them on a part time basis, ( cough cough) at a lower salary is in some perverse way a hidden tax cut for the company and a great way for the company to save money.

NO? Am I missing something.

No, I think you are right. This is one of the reasons many companies have not switched the retirement age from 65->70 in line with the new legal framework.

Bubblegun,
Look at the exit tax system in place and a system to disclose foreign financial assets. Look at the low inheritance tax exemption. These are relatively recent changes to try to tax the "rich". The issue is that it also discourages successful foreigners to moving to Japan and also Japanese Citizen whom have left Japan to get paid more to never return to Japan. So the intention to collect more tax is already backfiring ending up reducing the total tax revenue, limiting job opportunities for the working population, and cutting pension benefits for the retired.

I think the exit tax system is completely fair and needed to be established. I do not think one could fairly assert it has resulted in a shrinking gdp/loss of tax revenue yet. Inheritance taxes help create equality and equity in society. They also encourage the wealthy not to hoard wealth by distributing it earlier while they are still living.

[beanhead]

As Putin stated, Japan is the most successful socialist state.

I have never heard this from Putin.

I used to meet quite a lot of Chinese students living in Japan.
I asked one of them why they all came to Japan, and he said that they were sent by the government of the PRC.
'Really?', I replied, what for?

His reply: we are sent here to learn how to do communism properly...

[JimNasium]

When I first got here to Japan I didn’t join the medical or pension system. After a while I finally got things sorted out. I was feeling pretty bad about how measly my pension was going to be, but then I noticed it seems it will keep me in the low income bracket when I retire. So my taxes and medical payments will be quite low. As long as I can keep up my iDeCo, TNISA, and regular investments, I’ll actually be sitting pretty good during retirement.

[RetireJapan]

When I first got here to Japan I didn’t join the medical or pension system. After a while I finally got things sorted out. I was feeling pretty bad about how measly my pension was going to be, but then I noticed it seems it will keep me in the low income bracket when I retire. So my taxes and medical payments will be quite low. As long as I can keep up my iDeCo, TNISA, and regular investments, I’ll actually be sitting pretty good during retirement.

This is something I have my eye on. Like many countries, Japan does not really treat investment income as income (under current rules) so it is possible to appear to be low income (with all the tax/health insurance/etc benefits) while also being asset rich...